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9-11 Epsilon Co. can produce a unit of product for the following costs: An outside supplier offers to provide Epsilon with all the units it

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Epsilon Co. can produce a unit of product for the following costs: An outside supplier offers to provide Epsilon with all the units it needs at $60 per unit. If Epsilon buys from the supplier, the company will still incur 40% of its overhead. Epsilon should choose to: A) Buy since the relevant cost to make it is $56. B) Buy since the relevant cost to make it is $72. C) Make since the relevant cost to make it is $56. D) Buy since the relevant cost to make it is $48. E) Make since the relevant cost to make it is $48. Minor Electric has received a special one-time order for 1, 500 light fixtures (units) at $5 per unit. Minor currently produces and sells 7, 500 units at $6.00 each. This level represents 75% of its capacity. Production costs for these units are $4.50 per unit, which includes $3.00 variable cost and $1.50 fixed cost. To produce the special order, a new machine needs to be purchased at a cost of $1.000 with a zero salvage value. Management expects no other changes in costs as a result of the additional production. Should the company accept the special order? A) Yes, because incremental costs exceed incremental revenues. B) No, because the incremental revenue is too low. C) No, because additional production would exceed capacity. D) Yes, because incremental revenue exceeds incremental costs. E) No, because incremental costs exceed incremental revenue. Assume markup percentage equals desired profit divided by total costs. What is the correct calculation to determine the dollar amount of the markup per unit? A) Markup percentage per unit divided by total cost per unit B) Total cost per unit limes markup percentage per unit. C) Total cost per unit divided by markup percentage per unit. D) Total cost times markup percentage. E) Markup percentage divided by total cost

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